Budget Planner: How to Effectively Manage Your Finances

Managing your finances can be challenging at times, especially when you’re trying to save money for the future at the same time. Whatever your financial situation or savings goals, at Newcastle Building Society we’re always here to support you.

The first step in managing your finances is to establish what your budget will be.

Why do I need a budget?

We know that not everyone finds the idea of restricting their finances appealing. But, setting a budget and sticking to it is your safest bet for reducing your money worries. It’s easy to allow spending to get out of hand, especially at times like Christmas and on holidays, or when planning an event such as a wedding, but a budget will ensure you’re never spending more than you earn or have saved.

However, a budget isn’t just for special occasions. Keeping to a budget helps to ensure that you’re prepared for unexpected events too.

The more detailed your budget, the better prepared you are for life’s unexpected hiccups! For example, you may allot yourself a monthly budget for fuel, but forget to put any money aside into an emergency fund for a sudden car breakdown. Instead of being something that stops you from having fun, a budget should be seen as a safety net that allows you to enjoy yourself - whilst still being able to put money aside for a rainy day.


What do I need before I prepare my budget?

So, you’ve decided to prepare a budget and keep count of where your money is going. But, where do you start?

You may not always have all of your recent spending accounted for but, if you can, get together three months’ worth of bank statements, payslips, household bills and whatever receipts you have handy. Failing any of these, an estimate can be just as effective. Once you have all or some of the above, you’re ready to go. Planning a budget can be quite a task, but don’t be deterred by how long they take - it’s well worth it in the longer term.

How do I start to plan my budget?

Now you’re ready to start setting a budget, you should begin with your regular income. One of the first things to consider is who you’re including in this budget. For example, you may be budgeting for both you and your partner. If this is the case then be sure to add their income and outgoings, as well as your own, as you go along.

Make a note of things such as your salary, your state pension, any benefits you may receive and any income from savings accounts. Don’t forget that when you consider your income, you should also be including additional income that may not be as regular - such as gifts from family or friends.

If you have any other sources of income, then be sure to add that on too – it’s very important that your budget includes as much detail as possible! Total this up, and make a note of it for later in the process.


What are my outgoings?

Addressing just how much money you spend isn’t a discussion many of us want to have anytime soon. But, be honest with yourself about every penny. When in doubt, it’s best to round up than down.

Your actual spending is often a lot harder to account for than your income. So we’ve divided spending into these simple categories, to help you break down your outgoings:

  •  Your Home - including regular payments such as a mortgage, as well as renovation costs. Bills including mobile, tv and broadband etc.
  •  Motoring & Public Transport
  •  Debt Repayments and Savings
  •  Health and Beauty – including gym memberships, beauty appointments, clothing and so on
  •  Miscellaneous – any other outgoings that don’t fit into the above categories, such as socialising

Keeping stock of what you’re spending isn’t just advisable when you’re setting up a budget. You should continue to keep an eye on your outgoings as often as you can to avoid over-spending.

It’s also important to be realistic about how much money you have when payments such as tax or pensions have been accounted for. 

What do I do now?

Once you’ve calculated how much money you’re spending for each of these categories, you can easily identify where you can trim back on your outgoings.

If you’re spending more than you’re earning, don’t panic! Create some savings objectives, for example to spend less on public transport and cycle to work, or opt for a cheaper supermarket to cut the costs of groceries. A budget can take some time to work effectively, so remember to exercise patience and perseverance. Very often, when we realise just how much we’re spending we become too ambitious in our cutbacks. So remember to be realistic with your budget, to really ensure its success.

Once you’ve established a budget, you should be able to see how much money you can realistically save into a savings account on a regular basis.

Read our blog for more tax-efficient ways to save your money, or take a look at our Cash ISA guide to find out more.

Set savings targets to keep you motivated and focused on your budget. These goals can be short term (1-3 years) such as:

  •  Saving up an emergency fund (3+ months of salary)
  •  Putting away money to fund your annual holiday

Or, these goals can be longer term (4+ years) such as:

  •  Saving into a pension fund
  •  Saving towards your child’s education

Prioritising your goals can give you a clear idea of where to start saving, and how regularly. For guidance on choosing the most suitable savings account for your savings goals, call us on 0345 734 4345 or book an appointment at your local branch.

What can I do if I’m experiencing financial difficulties?

When you experience financial difficulties, please don’t feel that you are alone. If you have a mortgage with the Newcastle and are having problems with your repayments, please let us know as soon as possible so that we can do our best to help you – take a look at our information page on payment difficulties to find out more.

Other sources of support, and independent debt advice include:

  •  Your local Citizen's Advice Centre.
  •  StepChange on Freephone 0800 138 1111.
  •  National Debtline on Freephone 0808 808 4000.
  •  Money Advice Workers at your local Council - the telephone numbers will be listed in the Yellow Pages and you should also find details online.

We hope that you have found this guide to budgeting and managing your money useful, and that you feel you have a clearer idea of where to begin. But, should you need a little more guidance, feel free to call our Savings Advisors on 0345 734 4345. Or, if you’d prefer to discuss your needs in person, you can book an appointment today at your local Newcastle Building Society branch.